If you were a trader on the financial markets, I’d think that you’ve probably had quite an interesting week. After all the S&P500 is down 11.5% (an official correction without even going back into the declines of the previous week), our FTSE100 is down 11.1%, the Nikkei225 is down a more modest 9.6% while the ASX200 is down 9.8%.
Word on the street is that this has been caused by fear of what coronavirus, or to use its catchier name, COVID-19, could do to global financial performance, including the more than 1,000 companies contained within just those four faceless indices I’ve mentioned. Years ago I proved I was a useless trader so with that in mind I’d also still suggest that some of the moves are caused by the coronavirus being a good excuse to have a market pullback given markets like the S&P500’s current hefty valuation.
Down market moves like this then give those of us who are paid to sell drama a great opportunity to come up with headlines like “Coronavirus meltdown: Airlines plunge as global stock markets suffer their worst week since the 2008 financial crisis” (I won’t link to the source of that one but if you’re interested Google is your friend) through to something a little more data driven like “Shares drop in worst week since financial crisis”
If you didn’t take personal finance seriously, articles like those might even be enough to cause you to panic (whether or not the first $100 billion trading day for the ETF SPY (an S&P500 tracker) was panic is of course debatable) with your own wealth or even not get started on the road to financial independence in the first place.
Of course in amongst all this there are good quality reasoned articles trying to balance up the drama. As I have the data to hand (I check my financial position every Saturday morning with a decent coffee in hand, it takes 15 minutes) I’m also going to also have a go at presenting a bit of balance by simply sharing what this week has meant for somebody who is now financially independent and working a plan that should enable us to just live off the dividends of a globally diversified asset class diversified portfolio, that now consists largely of ETF’s tracking indices like those above, in the not too distant future.
Today my asset allocation looks like this
with my financial journey now looking like this
I could present that information in two ways. Firstly, I’m down £83,700, which is more than 3 years of planned spending, which sounds pretty scary or secondly, I’m down 5.8% which puts my wealth back to where it was in June 2019, which sounds a little more benign. The difference between the referenced markets 9.6% to 11.5% declines and my performance is diversification of asset classes, countries where those assets exist and currency movements.
Where it gets even more interesting is, that while no final decision has been made, it’s looking more and more likely that we’ll be emigrating yet again to more sunnier climes. Our visa application has passed it’s first hurdle, resulting in a chunk more money being spent, so we may only be a few months away from having to make a big decision. Priced in the currency of that country and that 5.8% decline becomes an even more modest 5.1%. In wealth terms I’m back to where I was in December 2019!
Looking at it that way my next step is to have another cup of joe, after all it’s a pretty grey and wet day out there today, then financially do absolutely nothing.
As always though, you need to do your own research and act accordingly. Have you done anything in the financial markets this week and are you planning to take any action in the near future?
Word on the street is that this has been caused by fear of what coronavirus, or to use its catchier name, COVID-19, could do to global financial performance, including the more than 1,000 companies contained within just those four faceless indices I’ve mentioned. Years ago I proved I was a useless trader so with that in mind I’d also still suggest that some of the moves are caused by the coronavirus being a good excuse to have a market pullback given markets like the S&P500’s current hefty valuation.
Down market moves like this then give those of us who are paid to sell drama a great opportunity to come up with headlines like “Coronavirus meltdown: Airlines plunge as global stock markets suffer their worst week since the 2008 financial crisis” (I won’t link to the source of that one but if you’re interested Google is your friend) through to something a little more data driven like “Shares drop in worst week since financial crisis”
If you didn’t take personal finance seriously, articles like those might even be enough to cause you to panic (whether or not the first $100 billion trading day for the ETF SPY (an S&P500 tracker) was panic is of course debatable) with your own wealth or even not get started on the road to financial independence in the first place.
Of course in amongst all this there are good quality reasoned articles trying to balance up the drama. As I have the data to hand (I check my financial position every Saturday morning with a decent coffee in hand, it takes 15 minutes) I’m also going to also have a go at presenting a bit of balance by simply sharing what this week has meant for somebody who is now financially independent and working a plan that should enable us to just live off the dividends of a globally diversified asset class diversified portfolio, that now consists largely of ETF’s tracking indices like those above, in the not too distant future.
Today my asset allocation looks like this
Click to enlarge, Current RIT Asset Allocations
with my financial journey now looking like this
Click to enlarge, RIT Progress Towards Retirement and In Retirement
I could present that information in two ways. Firstly, I’m down £83,700, which is more than 3 years of planned spending, which sounds pretty scary or secondly, I’m down 5.8% which puts my wealth back to where it was in June 2019, which sounds a little more benign. The difference between the referenced markets 9.6% to 11.5% declines and my performance is diversification of asset classes, countries where those assets exist and currency movements.
Where it gets even more interesting is, that while no final decision has been made, it’s looking more and more likely that we’ll be emigrating yet again to more sunnier climes. Our visa application has passed it’s first hurdle, resulting in a chunk more money being spent, so we may only be a few months away from having to make a big decision. Priced in the currency of that country and that 5.8% decline becomes an even more modest 5.1%. In wealth terms I’m back to where I was in December 2019!
Looking at it that way my next step is to have another cup of joe, after all it’s a pretty grey and wet day out there today, then financially do absolutely nothing.
As always though, you need to do your own research and act accordingly. Have you done anything in the financial markets this week and are you planning to take any action in the near future?
So you are off to Oz!
ReplyDeleteSounds like Australia if it is I'm curious as the visa route taken. Have looked at it myself a few times and had one failed attempt where got required points (just) but no invite (over-subscribed).
ReplyDeleteI'm down a similar percentage and about £30K in my pension. This month's contribution went in as normal. It's hard to get too concerned given that £30K appeared since last Dec. Even so, I've got about a decade before I start taking any income from it.
ReplyDeleteEqually nothing wrong in parking some as cash in case the turbulence continues a while.
DeleteIt's a good point, Jonez - and that's the strategy I've taken to non-pension money. I've moved about half of it into cash over the last few months.
DeleteSome sensible thoughts there.
ReplyDeleteMoney is all a bit easy come and easy go.
Just wondering if you factored health care into your emigration plans?
The people living it up in South east Asia may have a shock that 3rd world prices give you 3rd world problems. And even private medical cover has its limits
If deglobalisation is a trend to recognise then Aus may have further to fall. Rent and retain funds offshore as a hedge
ReplyDeleteInteresting blog, congrats for making it to FI and starting the next adventure.
ReplyDeleteI'd be especially interested how you set up your UK accounts and avoided the pitfalls for non-residents; and how you handle (perhaps even benefit from) tax differences abroad?
Many thanks.
If is Australia, look me up. Sydney based and we have an airbnb you can stay in.
ReplyDeleteI'm down in percentage terms more than this. Do plan to drip feed investments in tracker and blue chip stocks over next few of months. Good luck with your next move. If was me rent house if owner and, or put stuff in storage and move over later to give you the option to come back. As have two friends emigrated to Oz, one came back after couple of years.
ReplyDeleteInteresting update, RIT and fascinating to see how the recent downturn has affected your numbers (ie not much really).
ReplyDeleteGreat to hear that your plans of moving abroad (again) continue to progress - any chance of this being delayed/postponed due to the current outbreak of Covid-19?
I´m retired and most of my income is derived from my dividend portfolios - down more than 10% but I´m not expecting any hit on the income and the markets always recover ..... eventually (https://ace-your-retirement.blogspot.com/2020/01/retiring-on-dividends.html). I´ve also got a chunk of my investments in a Harry Browne style Permanent Portfolio - that went up 0.5% due to gold and long term gilts compensating for the equity falls.
ReplyDeletePops 321
ReplyDeleteA sensible long term approach and viewpoint. I will be looking to add some high yielding FTSE 100 shares to my overall position ISA wrapped. I will then look at their position regularly but expecting to no sell for 10 years unless they rocket upwards.
Looking forward to finding out your destination and if it is Australia let me know...lots of contacts and knowledge I could share. Well if it’s Sydney. If it’s anywhere else I know nothing 😆
Stay lucky.
Hi RIT . Your sanguine post of 29th Feb maybe deserves a follow up soon. For some investors the recent collapse into a bear market may be life changing ( in which case they probably should not have been investing so much ( or anything ) in the stock markets. But many more may find that such occurences are going to result in an alteration of their approach / attitude / allocation / strategy and we can all benefit from regular looks at our portfolios and trying to be honest with ourselves as to what we are really trying to achieve.
ReplyDeleteI think you are very able at putting that into a piece to encourage such reflections . Personally speaking I would be interested to hear your comments and thoughts.